Resource allocation: an economic problemSelected problem and contextThe problem I chose to study is the allocation of resources, which are mainly money, by a local authority, namely the City. of Westminster Council. The reason this resource allocation has become an economic problem is that money is a limited resource, so there is a shortage and the board must make choices about how to allocate the resources it has been given . This type of resource allocation is different from that faced by a private company in that it has the ability to expand and increase its resources, whereas local authorities often do not have the capacity to increase their resources overall, rather than diverting resources from one need to another. .- Westminster Council must allocate money to different departments from this general fund. This money must be allocated to the different departments that need funding such as Education, Environment and Leisure, Finance, Housing, Planning and Transport and Social Services. Not only must the board simply allocate resources to different departments, but it must also judge how much of the allocation, education for example, it chooses to devote to using its own staff and facilities to produce a service, rather than subcontracting. other companies to provide them with the work. To a certain extent, the ministry can use its existing funded facilities such as administration and technology to produce a service such as transport and planning. An example of this is how road maintenance is carried out. For many small roads, the local authority's transport department may be able to resurface the roads at a very low cost, for example £1,000 per 10m. This is very effective for the local community as well as for the capital; the labor, land and business are already in place. However, for bridges for example, the local authority does not have the equipment, i.e. the capital and labor required to provide the service required for their repair. In this case, it would no longer be efficient to acquire the labor and capital needed to repair the bridge. This could work out to £10,000 per metre. At this point, the choice arises whether to contract the repair of the bridge to a private company with the capital and manpower to provide this service more efficiently, or to acquire the resources necessary to perform this service. the task themselves.